The determinants of Dutch capital structure choice

Linda H. Chen and George J. Jiang
Additional contact information
George J. Jiang: Groningen University

No 01E55, Research Report from University of Groningen, Research Institute SOM (Systems, Organisations and Management)

Abstract: This paper uses the structural equation modeling (SEM) technique to empirically test the determinants of capital structure choice for Dutch firms. We include major factors identified by capital structure theories and construct proxies for these factors with consideration of specific institutional settings in the Netherlands. We also carefully rescale the observed variables in order to conform with the linear structure of the model and the multivariate normality assumption. Our empirical results shed many important insights on Dutch firms’ financing behavior. In particular, we identified important factors that have so far been ignored in the literature for the Dutch capital structure choice. Furthermore our results provide evidence supporting the “static trade-off" hypothesis. While the “pecking-order" behavior is observed for Dutch firms, our results cast doubt on the rationale of asymmetric information behind the “pecking-order" hypothesis. We also point out that the static cross-section evidence is not sufficient to conclude whether or not the management of Dutch firms is entrenched. Models based on the dynamic behavior of firms’ capital structure choice are called for such tests.

Date: 2001
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://irs.ub.rug.nl/ppn/237346311 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden (http://irs.ub.rug.nl/ppn/237346311 [302 Found]--> https://irs.ub.rug.nl/ppn/237346311 [302 Found]--> https://www.rug.nl/research/portal/publications/pub(a8d1495d-b726-47aa-97c1-13313adf504b).html [301 Moved Permanently]--> https://research.rug.nl/en/publications/pub(a8d1495d-b726-47aa-97c1-13313adf504b).html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gro:rugsom:01e55

Access Statistics for this paper

More papers in Research Report from University of Groningen, Research Institute SOM (Systems, Organisations and Management) Contact information at EDIRC.
Bibliographic data for series maintained by Hanneke Tamling ().